Meta Platforms ($META) – Reality Labs Re-Shuffle – June 22, 2024
Meta’s CTO Andrew Bosworth sent an internal memo to Reality Labs employees this week about an organizational re-shuffle. In it, he announced that Reality Labs would be splitting into a Metaverse division and a Wearables division. The Metaverse group will include its Quest headset and the Horizon operating system (OS), with wearables including all other hardware.
Wearables like its Ray Ban smart glasses were designed with augmented reality (AR) in mind; the Quest 3 device, conversely, “brought Mixed Reality (MR) into the mainstream.” MR and AR are very similar ideas; Still, Meta feels that focus on each should be split, with AR use cases perhaps more ready for deployment today and MR use cases offering a higher future value ceiling (just more immersive). To the team, the Quest MR unlock gives them a more intuitive and concrete path to drive Horizon OS traction. It now has a “long-term vision of how that software experience will evolve over the next two years.” Despite the lackluster Horizon traction thus far, Meta remains “deeply committed to investing in this. It is still viewed as the core software foundation to “power high quality experiences across MR and mobile.”
On the wearables side, the memo included more upbeat commentary on how well the Ray-Ban Meta glasses are going vs. expectations. Bosworth called this the “leading AI device on the market right now.” Meta is “doubling down” on building a wearables business around its Meta AI product. Part of these investments will be within the next generation of these glasses (which are expected to have hand controls) and its higher-cost hardware project called Orion.
Again, to me this is essentially splitting Reality Labs into near-term monetization and product opportunities (wearables) vs. longer term opportunities (Metaverse). It thinks the move will accelerate product velocity, improve communication and better separate the systems designed for AR (such as Meta AI so far) vs. those created for MR (such as Quest). We shall see.
